Growing up, I remember my mom would budget for the week for our needs using grocery store coupons and buying only what we needed, so nothing would go to waste. Each month, if we had leftover money, we would discuss as a family what the wants of the family were and decide how to spend it. One month, I wanted karate lessons and I got it. You better believe I showed up on-time, gave it all and appreciated every single lesson.
This was my “ah-ha” moment when I began understanding wants vs. needs. This is also the goal of the Teach Children To Save campaign created by the American Bankers Association, which takes place every April during Financial Literacy Month. Throughout the year, and especially during the month of April, our Wells Fargo Team members in Arizona visit schools and community groups to educate children and adults about budgeting and saving.
I am proud that Arizona is one of 17 states that offers high school students some form of financial instruction within a semester course. Further, this spring Senate Bill 1184 passed and will require high school students to have financial education and money management in their economics course. But, there is still a need for the financial community to step up and bridge the gap in financial literacy for children, and all ages.
Prosperity Now recently ranked Arizona 36th among all states for financial vulnerability. The below-average rating addressed issues including household debt loads, low credit scores, reliance on high-cost lenders and low or volatile incomes. On top of that, 50 percent of children in Arizona live in low-income households, meaning it’s very unlikely they are learning the basics of money at home.
That’s why this spring, 45 of our Tucson team members will return to C.E. Rose PreK-8 School for the sixth year to spend the day helping more than 800 students learn the basics of money, savings and earnings using Junior Achievement curriculum. More than 80 percent of these students receive free and reduced lunch, so our hope is that what they learn with us that day will also be shared at home.
Last year, Wells Fargo as a company had nearly 1,800 team members deliver 25,000 financial education events that reached nearly 108,000 children and adults. We hope to do even more this year and encourage parents to take an active role in ensuring your own kids are empowered with financial knowledge.
The American Bankers Association offers the following tips to help parents begin the conversation with their kids.
• Talk openly about money with your kids. Communicate your values and experiences with money. Encourage them to ask you questions, and be prepared to answer them — even the tough ones.
- Explain the difference between needs and wants, the value in saving and budgeting and the consequences of not doing so.
- Set up a chore chart and give your children an allowance for completing their tasks. Require them to save at least a small portion each week. The three jars method, one for spending, one for saving and one for charitable contributions is a good way to impart a sense of responsibility.
- Open up a savings account at your local bank for your children and take them with you to make deposits, so children can learn how to be hands-on in their money management.
- Be an example of a responsible money manager by paying bills on time, being a conscious spender and an active saver. Children tend to emulate their parents’ personal finance habits.